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Miami Herald
24-07-2025
- Business
- Miami Herald
IRS slot jackpot threshold is going up, experts say. But when?
The threshold for reporting slot machine jackpots to the IRS is going up, but not immediately. At least, that is how many people close to the casino industry are interpreting the situation. The One Big Beautiful Bill Act included a revision to IRS Code Section 6041, increasing the reporting threshold to $2,000 and tying future increases to inflation, according to legislative and policy experts. That change will affect the $1,200 threshold that currently triggers W-2G tax forms when players hit slot jackpots. The slot reporting threshold is governed by an IRS regulation, so the change will not go into effect until the agency updates its rules. "Congress passes laws, but federal agencies write the regulations to implement them," a spokesperson for U.S. Rep. Dina Titus, D-Nev., told the Review-Journal. The IRS has not yet commented on the changes, and the federal agency did not respond to an email seeking confirmation. Casino operators in Las Vegas are awaiting guidance. MGM Resorts International and Caesars Entertainment, who collectively operate 17 casinos on The Strip, did not respond to questions about the reporting changes or whether they had received any notification from the IRS. Nonetheless, the industry is claiming victory. "Raising the slot tax reporting threshold to $2,000 and indexing it to inflation is a long-overdue modernization that reduces regulatory burdens and improves the customer experience," said Chris Cylke, senior vice president of government relations for the American Gaming Association, the Washington D.C.-based trade organization. "It's a hard-fought win for our industry, and we look forward to working on regulatory implementation." The current slot jackpot reporting threshold of $1,200 has been in place since 1977. Presently, it is unclear who is responsible for including the language that will update the slot reporting threshold or what the original intent was. In March, Titus and U.S. Rep. Guy Reschenthaler, R-Pa., the co-chairs of the bipartisan Congressional Gaming Caucus, introduced the Shifting Limits on Thresholds (SLOT) Act to update the reporting threshold to $5,000 and index it to inflation. The bill has not moved since being introduced. In 2023, the IRS's advisory council recommended that the agency increase the threshold to $5,000 and index it to inflation. ___ Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
Yahoo
21-05-2025
- Business
- Yahoo
What the No Tax on Tips Act Means for Workers and Businesses
Man selecting 20% tip while using a handheld credit card scanner at a restaurant in Queens, New York. Credit - Lindsey Nicholson—UCG/UniversalMillions of American service workers—from bartenders and barbers to delivery drivers and nail techs—are one step closer to keeping their tips tax-free. In a rare show of bipartisan unity, the Senate has unanimously passed the No Tax on Tips Act, a sweeping proposal that would overhaul how tipped income is taxed in the U.S. If signed into law, the bill would exempt up to $25,000 in tips from federal income taxes. The bill, a signature campaign promise of President Donald Trump, now moves to the Republican-controlled House, where it enjoys broad support. 'We are one step closer to eliminating taxes on tipped wages for hardworking Americans,' Senate Minority Leader Chuck Schumer said in a statement following the bill's Senate passage. 'Working Americans— from servers, to bartenders, delivery drivers, and everything in between— work hard for every dollar they earn and are the ones who deserve tax relief, not the ultra-rich.' The effort to eliminate taxes on tips quickly gained traction during the 2024 campaign, with polling indicating majority support for the proposal across the country, though Americans are mixed on the potential outcomes of the policy. The idea has also drawn criticism from a number of economists and labor advocates. Here's what the bill would mean for workers and businesses. The No Tax on Tips Act would revise the IRS Code to eliminate the income tax on tips. Employees who 'traditionally and customarily received tips on or before December 31, 2023,' would therefore be exempt from paying taxes for up to $25,000 earned tip income. That includes waiters, bartenders, and delivery drivers. Beauty service workers—such as barbers, estheticians, and nail technicians—would also benefit, though the full list of eligible occupations would only be listed by the U.S. Treasury Secretary 90 days after the bill's passage. To qualify for the tax deduction, employees must have earned less than $160,000 for the 2024-2025 tax year. Should the bill become law, this income qualification will be adjusted for inflation. The exemption would impact only a small fraction of the country's workforce. The Yale Budget Lab estimates that some 4 million people worked in tipped occupations in the U.S. in 2023, representing about 2.5% of all U.S. workers. Others, such as the Economic Policy Institute (EPI), estimate tipped workers to make up a slightly higher percentage of about 5% And despite the proposal's broad appeal, economists say that curtailing taxes on tips may harm workers in the service industry. Already, 37% percent of tipped workers do not pay federal income tax because they earn so little. Experts fear that the new policy would incentivize employers to keep base wages stagnant. The tax change may also affect their eligibility for other programs, such as the child tax credit and earned income tax credit, or reduce their contributions to Social Security. The No Tax on Tips Act could further impact the nature of tipping culture in the U.S. Experts warn businesses could potentially encourage tipping requests, or make them mandatory, in order to pay their workers less. Research shows that 72% of Americans already feel they are being asked to tip workers more frequently, per a Pew Research Center report. The No Tax on Tips Act also expands the business tax credit for the portion of payroll taxes that businesses might previously have paid on certain employee tips. The National Restaurant Association voiced its support for the bill in January, praising the potential benefits for workers and saying they could have a positive impact for employers as well. 'Eliminating taxes on tips would put cash back in the pocket of a significant number of workers in the restaurant and foodservice industry and could help restaurant operators recruit industry workforce,' the organization said in a statement. 'Tax policy plays a major role in the success of the restaurant industry, so we'll continue to work with Congress on this and other common-sense tax policy that will stimulate investments and improvements in restaurants of all sizes and help operators make greater investments in their workforce and communities.' Contact us at letters@
Time Magazine
21-05-2025
- Business
- Time Magazine
What the ‘No Tax on Tips' Bill Means for Workers and Businesses
Millions of American service workers—from bartenders and barbers to delivery drivers and nail techs—are one step closer to keeping their tips tax-free. In a rare show of bipartisan unity, the Senate has unanimously passed the No Tax on Tips Act, a sweeping proposal that would overhaul how tipped income is taxed in the U.S. If signed into law, the bill would exempt up to $25,000 in tips from federal income taxes. The bill, a signature campaign promise of President Donald Trump, now moves to the Republican-controlled House, where it enjoys broad support. 'We are one step closer to eliminating taxes on tipped wages for hardworking Americans,' Senate Minority Leader Chuck Schumer said in a statement following the bill's Senate passage. 'Working Americans— from servers, to bartenders, delivery drivers, and everything in between— work hard for every dollar they earn and are the ones who deserve tax relief, not the ultra-rich.' The effort to eliminate taxes on tips quickly gained traction during the 2024 campaign, with polling indicating majority support for the proposal across the country, though Americans are mixed on the potential outcomes of the policy. The idea has also drawn criticism from a number of economists and labor advocates. Here's what the bill would mean for workers and businesses. How would the No Tax on Tips Act impact workers? The No Tax on Tips Act would revise the IRS Code to eliminate the income tax on tips. Employees who 'traditionally and customarily received tips on or before December 31, 2023,' would therefore be exempt from paying taxes for up to $25,000 earned tip income. That includes waiters, bartenders, and delivery drivers. Beauty service workers—such as barbers, estheticians, and nail technicians—would also benefit, though the full list of eligible occupations would only be listed by the U.S. Treasury Secretary 90 days after the bill's passage. To qualify for the tax deduction, employees must have earned less than $160,000 for the 2024-2025 tax year. Should the bill become law, this income qualification will be adjusted for inflation. The exemption would impact only a small fraction of the country's workforce. The Yale Budget Lab estimates that some 4 million people worked in tipped occupations in the U.S. in 2023, representing about 2.5% of all U.S. workers. Others, such as the Economic Policy Institute (EPI), estimate tipped workers to make up a slightly higher percentage of about 5% And despite the proposal's broad appeal, economists say that curtailing taxes on tips may harm workers in the service industry. Already, 37% percent of tipped workers do not pay federal income tax because they earn so little. Experts fear that the new policy would incentivize employers to keep base wages stagnant. The tax change may also affect their eligibility for other programs, such as the child tax credit and earned income tax credit, or reduce their contributions to Social Security. The No Tax on Tips Act could further impact the nature of tipping culture in the U.S. Experts warn businesses could potentially encourage tipping requests, or make them mandatory, in order to pay their workers less. Research shows that 72% of Americans already feel they are being asked to tip workers more frequently, per a Pew Research Center report. How would the No Tax on Tips Act impact businesses? The No Tax on Tips Act also expands the business tax credit for the portion of payroll taxes that businesses might previously have paid on certain employee tips. The National Restaurant Association voiced its support for the bill in January, praising the potential benefits for workers and saying they could have a positive impact for employers as well. 'Eliminating taxes on tips would put cash back in the pocket of a significant number of workers in the restaurant and foodservice industry and could help restaurant operators recruit industry workforce,' the organization said in a statement. 'Tax policy plays a major role in the success of the restaurant industry, so we'll continue to work with Congress on this and other common-sense tax policy that will stimulate investments and improvements in restaurants of all sizes and help operators make greater investments in their workforce and communities.'
Yahoo
02-04-2025
- Business
- Yahoo
Former Just Salad CFO ‘deprived' of $1.2M bonus for ‘doing job too well,' says lawsuit
This story was originally published on To receive daily news and insights, subscribe to our free daily newsletter. The former CFO of restaurant chain Just Salad claims he was denied a $1.2 million payout not because he underperformed but because the company grew too much, too fast. Stefan Boyd is suing his former employer over the payment that he says is being kept from him due to a technicality. In a complaint filed in New York Supreme Court, the former CFO says that after he left the company in 2023, he was under the impression that if the company raised capital at a deemed valuation of $250 million or more by the end of 2024, he would be compensated. Around September 2024 the lawsuit says, Boyd learned that Just Salad had completed its planned capital raise, securing $200 million at a valuation close to $1 billion. In February of 2025, the company announced the funding round. The filings allege that Just Salad founder and CEO Nick Kenner told Boyd directly when he asked about his compensation that he was 'screwed' because the company's valuation exceeded expectations and the Equity Appreciation Unit plan — on which Boyd's separation payout was premised — had been terminated just two months prior. As a result, Kenner allegedly told Boyd he would receive nothing despite acknowledging that Boyd's work helped enable the company's nearly $1 billion valuation. However, the agreement, which was part of a separation agreement when Boyd left the company in 2023, tied a payout to a distribution event, which, in the EAU's plan, consists of the following: (a) a Sale of the Company or (b) an IPO; provided that the event also qualifies as a 'Change in Ownership or Effective Control' under IRS Code Section 409A. The term sale there is also defined as 'a sale of at least 30% of the membership interests or assets of the company unless the Board chooses to declare a smaller transaction as qualifying.' The technicality that Kenner references is that the amount of equity that Just Salad sold (20%) is less than what is defined as a sale (30%) in section A of the EAU. Due to this, Kenner and company argue Boyd isn't owed anything, although the lawsuit also claims other employees who were in similar positions were paid and are still actively receiving payments 'in the spirit' of the plan. 'Just Salad has adopted an absurd position,' the suit says. 'Boyd should be deprived of the intended reward for his work totaling around $1.2 million — because the value he created was too great; he did his job too well; the foundation he built was too strong; the Company grew too much and raised too much money (all while parting with too little of its equity).' A Just Salad representative said when Boyd left the company in 2023, he had 'a clear separation agreement that he helped craft and negotiate,' and since the terms of the agreement were not met, it did not 'stipulate' a payment.' Just Salad added, 'The accusations and purported statements made are categorically false, and we look forward to vigorously defending these allegations.' Boyd is suing to recover his unpaid wages, along with more than $5 million in additional damages. Recommended Reading CFO crimes, litigation, financial control failures, ethics violations and more Sign in to access your portfolio
Yahoo
22-03-2025
- Business
- Yahoo
Section 1256 Contracts: What They Are and How to Report
SmartAsset and Yahoo Finance LLC may earn commission or revenue through links in the content below. Section 1256 contracts include certain regulated futures contracts, foreign currency contracts and non-equity options. These contracts receive a unique tax treatment under the IRS code and are subject to mark-to-market accounting, meaning that all open positions are treated as if they were sold at fair market value at the end of the tax year. This can impact an investor's tax obligations by requiring unrealized gains and losses to be reported annually. A can help manage taxes on 1256 contracts and develop other strategies for your investment plan. A Section 1256 contract is a financial instrument with special tax rules under IRS Code Section 1256. These contracts are traded on regulated exchanges and follow specific tax treatment. Section 1256 contracts include: Regulated futures contracts. Futures contracts traded on U.S. exchanges that meet IRS regulations. Non-equity options. Options contracts that are based on assets other than individual stocks, such as commodities or indexes. Foreign currency contracts. Certain forward contracts involving foreign currency trades. Dealer equity options and dealer securities futures contracts. Contracts traded by market makers and dealers in securities and derivatives. One of the primary advantages of Section 1256 contracts is their favorable tax treatment. Profits and losses are taxed using a 60/40 split, meaning that 60% of gains are taxed at the lower long-term capital gains rate, while 40% are taxed at the higher short-term rate. This is a significant tax advantage when compared with standard stock trading, where short-term capital gains are taxed as ordinary income. To explain how the tax treatment for a Section 1256 contract works, let's take a look at a more-detailed example. Suppose an investor buys a regulated futures contract for $10,000. By December 31, the contract's fair market value rises to $12,000, but the investor does not sell. Under Section 1256 rules, they must report a $2,000 gain on their tax return for that year. If the value decreases the following year, they can report the loss, even if they do not close the position. Here are three things that investors should know about Section 1256 contracts: Mark-to-market accounting. On December 31 of each year, all open contracts are treated as if they were sold and repurchased at their fair market value. Any gains or losses are recognized for tax purposes, regardless of whether the investor has actually closed the position. 60/40 tax treatment. Gains and losses are split 60% long-term and 40% short-term, which can significantly reduce tax liabilities compared to traditional trading. Loss carryback provision. If a taxpayer has a net loss from Section 1256 contracts, they can elect to carry back the loss up to three years to offset gains from previous years, potentially resulting in a tax refund. Here are seven general steps to file Form 6781 and report gains or losses from Section 1256 contracts for tax purposes: Obtain a summary of trading activity. Gather trade confirmations, brokerage statements and mark-to-market valuations for all Section 1256 contracts. Complete Part I of Form 6781. List the total net gains or losses from Section 1256 contracts, including both realized and unrealized amounts. Apply the 60/40 tax treatment. The IRS automatically divides the total gain or loss into 60% long-term and 40% short-term capital treatment. Complete Part II if applicable. If trading involved straddle positions, additional calculations may be required. Elect loss carryback if necessary. If the tax year resulted in a net loss, an election can be made to carry back the loss and amend prior tax returns. Transfer totals to Schedule D. The calculated amounts from Form 6781 must be transferred to Schedule D (capital gains and losses) on the Form 1040 tax return. Attach Form 6781 to the tax return. Submit the completed form with the federal tax return to the IRS. Yes, traders with a net loss from Section 1256 contracts can elect to carry back the loss up to three years to offset prior gains. This can result in a tax refund if the taxpayer had taxable Section 1256 gains in previous years. No, only regulated futures contracts, foreign currency contracts, non-equity options and dealer contracts qualify as Section 1256 contracts. Stock options and equity-based derivatives do not receive the same tax treatment. Failing to report mark-to-market gains or losses can result in IRS penalties, interest charges and an increased risk of an audit. Since all Section 1256 contracts are subject to annual mark-to-market accounting, accurate reporting is required even if the position is still open. Section 1256 contracts have special tax rules, including the 60/40 tax treatment and mark-to-market accounting, making them different from other investments. These contracts can offer tax benefits but require filing Form 6781 and reporting gains or losses yearly, even if trades are still open. Filing Form 6781 correctly is important to apply the right tax treatment. Investors with frequent trades may find it helpful to work with a tax consultant for accuracy. A financial advisor can help you identify investment opportunities and manage both taxes and risk for your portfolio. Finding a financial advisor doesn't have to be hard. SmartAsset's free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now. If you are looking for strategies to diversify your portfolio, here's a roundup of 13 investments to consider. Photo credit: © © © The post Section 1256 Contracts: What They Are and How to Report appeared first on SmartReads by SmartAsset. Sign in to access your portfolio
